Canada: Update - Renewable Energy RFP Opportunities In Nova Scotia And Quebec: RFP Launched In Quebec, Consultations Started In Nova Scotia

In our previous article, we discussed recent opportunities and developments for renewable energy RFP projects in Nova Scotia and Quebec: a 2021 RFP in Nova Scotia and two planned renewable energy calls for tenders in Quebec.

1. December 13th Announcement on Official Launch of the Quebec RFPs

In July 2021, the Quebec Government published decree 906-2021 and two proposed regulations, which included details on a call for tenders for a 300 MW block of wind power (A/O 2021-02) and a call for tenders for a 480 MW block of renewable energy (A/O 2021-01). On November 24, 2021, three new decrees, decrees 1441, 1440 and 1442-2021, were published, modifying the existing decrees and regulations relating to the Quebec RFPs.

  On December 13^, 2021, Hydro-Quebec officially announced the launch of the Quebec RFPs. Reiterating the objectives pursued by these RFPs, Hydro-Quebec stated in its press release that energy delivery must begin no later than November 30, 2026, and that contracts must be approved by the Régie. Hydro-Québec has established that the final (and firm) bid submission deadline will be July 21, 2022, by 4:00 p.m. (EST).

Registration and Important Dates of the Quebec RFPs

Both Quebec RFPs will follow a similar structure, procedure and timeline:

• Each RFP will require interested participants to first register for the process, using a form specific to each RFP.
• In both cases, only registered participants can submit questions to Hydro-Québec, and may only do so using a specific form during a specified period. All answers will be made publicly available online.
• Details on bid submission requirements are disclosed to participants once their registration is confirmed.
• Submissions will only be accepted and opened once participants have paid the required fees to Hydro-Québec.

On July 22, 2022, Hydro-Québec will open bids for each RFP during two different virtual Microsoft Teams sessions, which will later be broadcasted publicly on July 26, 2022.

Overview of RFP A/O 2021-01 for 480 MW block of renewable energy and RFP A/O 2021-02 for 300 MW block of wind power

RFP A/O 2021-01 will allow Hydro-Québec to enter into one or more long-term renewable electricity supply contracts which will provide it with a 480 MW energy supply in peak power as well as 1.4 TWh of energy during winter (December 1 to March 31), remaining open to considering bids with options for energy supply offers outside of the winter period. This broad RFP is designated to enable projects with diverse energy delivery profiles, including variable, baseload or cycling and which may or may not include a power guarantee, as long as the project can consistently provide a minimum of 300 hours of energy during winter.

Through RFP A/O 2021-02, Hydro-Québec's aim is to enter into one or more long-term contracts which would provide it with a 300 MW block supply of wind energy generated by new wind projects. Interested bidders should ensure that any potential projects provide for meaningful community or Aboriginal participation, one of the pivotal assessment criteria. This criteria encompasses three requirements:

1. bidders should ensure that the project involves local community participation of a minimum of around 50%, with a bidder's project earning points if the proposed project goes beyond this threshold, and losing points for anything under 50%;
2. bidders must aim for 60% of the overall expenses to be linked to Quebec content;
3. potential project's regional content should also be maximized, with regional expenses covering 35% of the overall expenses.

Points 2 and 3 may overlap. Readers should note that the definition of "local community" was recently further clarified in Decree 1442-2021.

Potential Impacts of the Régie's Ongoing Consultation Process on the RFP

Hydro-Québec's RFP announcement is independent of the Régie's public consultation process for file R-4110-2019, which is still underway. Any of the Régie's conclusions could involve modifications to the Quebec RFPs's tender documents, including the Bid Evaluation Criteria Weighting Grids. At this moment, the Régie is studying interveners' replies to Hydro-Québec's latest comments on the tender documents, and reviewing evidence and pleadings submitted by all participants. The Régie's decision could potentially be released later this December.

2. New Details on the Nova Scotia RFP Project

As discussed in our previous article, the current Nova Scotia RFP aims to attract bids from Independent Power Producers for a 25-year renewable energy contract, particularly wind and solar energy, which would upon completion provide 350 MW of power by 2030. Since then, new details about the RFP have been released. An updated draft of the Rate Base Procurement (RBP) RFP was published, and any comments on the draft were expected by December 8, 2021. This was followed by a number of announcements, including clarifications on the Nova Scotia Environmental Assessment process, guidance on consultation with the Mi'kmaq, and the submission to the Utility and Review Board of Nova Scotia ("NSURB") of an "Application for Approval of a Standard Form Power Purchase Agreement".

New Draft of the Proposed RFP Available

Among the changes that have been made to the updated RFP draft, the following are of note:

• Specific types of Renewable Energy: The most important change to the RFP draft is that proposals should now only relate solar or wind energy sources, generated through a renewable low-impact electricity generation facility, with solar power being generally unregulated in Nova Scotia;
• Federal Funding: A number of clarifications were added to the RFP to clarify federal funding compatibility, including Canadian Infrastructure Bank investment and financing possibilities;
• Expression of Interest: the RFP now includes an Expression of Interest requirements;
• Minimum Criteria: New requirement details were provided in the RFP, including added information on interconnection status criteria, pricing, procurement and construction factors and a new framework for regulatory approval and permits by looking at "VECs, Effects Management, Approvals & Permits";
• New Pricing Criteria: New scores were added to the existing pricing scheme, including a Minimum Criteria of $89/MWh and a Price Threshold of $66.34; and
• Updated Weighing Grid (as found in RFP Draft #2): In the current RFP draft, proposals must first meet a minimum criteria in order to be evaluated using the scoring grid. The total number of points is 100, with each category of points being attributed non-cumulatively.

NSURB Notice of Application for PPA Approval

Pursuant to s. 37 of the Renewable Electricity Regulations, any Power Purchase Agreements prepared for the purchase of renewable electricity from independent power producers must be approved beforehand by the NSURB. As part of this requirement, an Application for Approval of a Standard Form Power Purchase Agreement was submitted to the NSURB early in December, opening a paper hearing and consultation process under Matter No. M10377. Interested parties are invited to comment on the application until January 7, 2022, with the RFP Administrator's reply expected by January 21, 2022.

When Will the RFP Process Start and What Could the Process Look Like?

Updated Timeline

Figure  1-Updated RBP Request for Proposal Timeline (figure based on information provided by Nova Scotia Rate Based Procurement in their RBP Request for Proposal Timeline).

*The Proposal Submission deadline will be the later of 1) 40 Business Days after the RFP Date of Issuance, OR 2) 20 Business Days after either the last Interconnection Feasibility Study included in Expression of Interest Form had been completed, or the PPA has been approved by the UARB. As a result, milestones marked with an asterisk are subject to change.

Once the RFP process starts, the first step will be for proponents to submit a Notice of Intent to Bid, two weeks after the RFP's release date, after which they will receive details on how to prepare and submit their proposals. The second step will be to prepare the proposal, over approximately 9 weeks, based on the eligibility requirements outlined in the RFP and the scoring details. At the third step, a shortlisted selection of the best proposals will be made and the RFP awardee(s) will be selected from this pool.

Nova Scotia Power, who is not leading the RFP, will be the contracted party with the winning proponent as the IPP for commercial energy sales contracts. Nova Scotia Power will also be involved in connecting the project's site to the Nova Scotia grid, and providing technical expertise.

Further documentation and information are available on the RFP's webpage.

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This Canadian Energy Perspectives blog post was prepared and published by McCarthy Tétrault's Power Group, which follows developments in energy and power law. For more information on upcoming Renewable Energy projects, please contact Jacob Stone, Louis-Nicolas Boulanger or Mathieu Leblanc.

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